FT News Briefing

What does China ‘de-risking’ actually mean?

Sep 28, 2023

10:08

Snipd AI

Exploring western companies' strategies to mitigate risks in China, global dealmaking at a decade low, Chinese battery groups avoiding US and Europe investments due to geopolitics, the appeal of Morocco as an investment location for Chinese companies, and the wider trend of companies de-risking from the West by setting up supply chains in different parts of the world.

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Quick takeaways

Mergers and acquisitions are experiencing their worst third quarter in over a decade due to higher interest rates and regulatory obstacles, making deals more expensive.

Western companies are adopting de-risking strategies in China by either divesting from the country or localizing themselves within it, while Chinese businesses are seeking alternatives to the US and Europe, such as investing in Morocco.

Deep dives

Mergers and acquisitions facing challenges due to higher interest rates and tougher regulations

Mergers and acquisitions are experiencing their worst third quarter in over a decade, primarily due to higher interest rates and stricter regulatory environments. The cost of borrowing has increased, making deals more expensive. The UK and the US have also placed obstacles for Microsoft's $75 billion bid to acquire Activision Blizzard. Nonetheless, there are a few bright spots, such as Cisco's acquisition of software maker Splunk and the merger of packaging companies West Rock and Smurfic Kappa, creating a $20 billion global group.

Introduction

4min

De-risking in China: Shifting Investment and Isolating Within the Country

4min

Exploring Morocco as an Investment Location for Chinese Companies

3min

Global dealmaking is languishing at a 10-year low, western companies are insulating their China operations, and Chinese battery groups are avoiding or delaying direct investments in the US and Europe because of geopolitics.

Mentioned in this podcast:

Dealmaking languishes at decade low on private equity drought

Chinese battery groups invest in Morocco to serve western markets

Western companies take slow steps towards China ‘de-risking’

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The FT News Briefing is produced by Fiona Symon, Sonja Hutson, Kasia Broussalian and Marc Filippino. Additional help from Monique Mulima, Monica Lopez, Peter Barber, Michael Lello, David da Silva and Gavin Kallmann. Topher Forhecz is the FT’s executive producer. The FT’s global head of audio is Cheryl Brumley. The show’s theme song is by Metaphor Music.

Read a transcript of this episode on FT.com

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